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Introduction tothe Taiwan Stock Exchange
Add: 3F, 9-12F, 19F, No.7, Sec.5, Xinyi Rd., Taipei, Taiwan 11049, Republic of ChinaTel: 886-2-81013101http://www.twse.com.twE-mail: [email protected]
Published in October 2011
Origin and Mission
Organization
Listing of Securities
Trading of Securities
Computer and Information Safety
Market Surveillance
Clearing and Settlement
TWSE Securities Borrowing and Lending System
Internationalization of Securities Market
Monitoring of Securities Firms
Investors Service
Securities Information
Contents
02
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Introduction to Taiwan Stock Exchange
Organization
TWSE is a private corporation with 15 board
directors and 3 supervisors. At least one-third of
the board directors and supervisors are appointed
by the government to represent the public interest.
TWSE has sixteen departments/offices,
whose functions are as follows:
Domestic Listing Department
‧ Drafting and executing domestic securities listing rules and regulations.
‧ Monitoring compliance with the continuing listing obligations by domestic listing companies
Foreign Listing Department
‧ Drafting and executing foreign securities listing rules and regulations.
‧ Monitoring compliance with the continuing listing obligations by foreign listing companies.
Trading Department
‧ Drafting and executing securities trading rules and regulations; promoting securities investment.
Clearing Department
‧ Drafting and executing securities clearing and settlement rules and regulations.
Origin and Mission
With a view to establishing a sound
capital market to encourage savings for the
formation of capital, the government of the
Republic of China initiated the Stock Market
Research Task Force in 1959. The Securities
and Exchange Commission was set up
in 1960 and the Taiwan Stock Exchange
(TWSE) was incorporated in 1961. TWSE,
funded by various private and state-owned
enterprises, began operation on February 9,
1962. This is the sole centralized securities
market in Taiwan.
Under the Financial Supervisory
Commiss ion o f the Execut ive Yuan,
TWSE aims to achieve four goals, namely,
accelerating the internationalization of the
securities market, promoting professionalism
and innovation, maintaining and improving
market operational mechanisms, and
enhancing efficiency and risk management.
In accordance with government policy,
TWSE provides a fair, efficient and safe
trading environment, and aims to lead the
Taiwan securities market into a new era of
internationalization.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Surveillance Department
‧ Draft ing and execut ing securi t ies market surveillance rules and regulations.
Compliance & Inspection Department
‧ Auditing the financial and business operations of securities firms.
System Development Department
‧ O v e r s e e i n g r e s e a r c h , p l a n n i n g a n d implementation of computer projects and related procurement affairs; developing, designing and testing application programs.
Computer Operation Department
‧ Administering installation, maintenance and management of computer-related facilities; executing, operating, servicing and auditing computer business.
Market Data & Corporate Systems Department
‧ Administering market data dissemination, including management, linkage, promotion and servicing; office automation.
Corporate Communications Department
‧ Contacting and communicating with international securities agencies; handling related international affairs; promoting securities investment and providing investors service; administering domestic public relations, acting as press liaison.
Corporate Planning & Strategy Department‧ Conducting research into securities-related
topics; publishing statistics; designing new products and managing a research library.
Finance Department
‧ Managing operational funds, cashiering, contracts, safekeeping of guarantee deposits, accounting and stock registrar matters.
Legal & Secretarial Services Department
‧ Managing secretariat affairs of the Board Meetings and Shareholders' Meetings and other business meetings; drafting related rules and legal services.
Administration Department
‧ Managing personnel, properties; arranging procurement matters and related affairs; administering corporate seals, files and documentation.
Labor Security Office
‧ Managing labor security and health matters.
Internal Audit Office
‧ Administering internal audits and controls of the Exchange, and reporting directly to the board of directors.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
enhance the quality of information disclosure
in the securities market, TWSE works with
GreTai Securities Market to manage a "Market
Observation Post System", and an "Information
Disclosure Evaluation System".
TWSE has focused on developing new
products to enhance diversification of securities
and provide investors with hedging tools.
TWSE began to accept listing applications
of call warrants in September 1997 and put
warrants in January 2003. The first Exchange
Traded Fund (ETF) was launched on June 30,
2003 then ETF warrants in July 2004; overseas
ETFs were introduced in August 2009.
Listed securities on TWSE currently include
stocks, entitlement certificates of convertible
bonds, convert ib le bonds, government
bonds, beneficiary certificates, call warrants,
put warrants, ETFs and Taiwan Depository
Receipts (TDRs).
Listing of Securities
Domestic public companies or foreign
issuers that have not listed their shares on any
other stock exchanges abroad applying for initial
public offerings have to meet certain financial
and operational criteria. After close examination
by TWSE's listing departments, the application
is submitted to the "Securities Listing Review
Committee" for consideration. Thereafter, the
application needs to be confirmed by a resolution
from the Board of Directors for endorsement,
before being submitted to the Securities and
Futures Bureau (SFB) for final approval. For
foreign l isted companies applying for the
secondary listing on TWSE, the foreign listing
department examines then sends all applications
to SFB for final approval.
After the l ist ing appl icat ion has been
approved by the SFB, the public company pays
listing fees, and submits its quarterly certified
financial reports to TWSE for examination.
TWSE ac t i ve l y p romo tes co rpo ra te
governance of listed companies, supervises and
regulates their financial and operational status
on a routine basis, carries out investigations into
unusual circumstances, and verifies material
information disclosures. In addition, in order to
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Trading of Securities
When TWSE was established, trading in
the centralized market place was carried out
on an open trading floor. However, to meet the
changing needs of the market environment,
the trading system has progressed through
several phases. In August 1985, the open
trading floor was gradually replaced by a
computer-aided trading system (CATS), which
was eventually upgraded to a fully automated
securities trading (FAST) system in 1993. The
fully computerized trading system has helped
boost the trading capacity and efficiency of
the stock market.
The trading hours of the centralized
market trading session are as follows:
Investors may place an order in person, by phone,
fax or Internet. Orders are entered via terminals on
securities firms' premises into TWSE's main computer,
and are processed and executed by the trading system on
a price-and-time-priority principle. In special cases, listed
stocks may be traded through negotiation, auction, tender
or other means.
Orders of all securities (except for warrants) are
matched by call auction. TWSE conducts "intra-day
volatility interruptions" to prevent over volatility of stock
prices. Whenever the trading system detects that the
potential execution price of the security will fall out of a
specified range (+/-3.5%) of the last traded price, the
security matching is postponed for 2-3 minutes. As for
Trading Sessions Trading Days Trading Hours
Regular Trading Monday - Friday 09:00 ~ 13:30
Off-hour Trading Monday - Friday 14:00 ~ 14:30
Odd-lot Trading Monday - Friday 13:40 ~ 14:30
BlockTrading
Non-paired Trade
Monday - Friday 9:00 ~ 17:00
Paired Trade
Monday - Friday08:00 ~ 08:30
(Pre-opening trading hours)9:00 ~ 17:00
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Computer and Information Safety
TWSE'S computer ized t rading, set t lement,
and information transmissions are highly efficient.
For the purpose of maintaining market integrity and
safeguarding investors' rights, TWSE pays close
attention to information and communication safety
mechanisms. TWSE has two full capacity back-up
computer sites to guard against any possible system
failure. TWSE acquired ISO9001 Quality Management
System, ISO27001 Information Security Management
System, and ISO20000 IT Service Management System
certifications for its computer information systems.
Market Surveillance
A healthy and orderly market should be able
to protect investors' rights and privileges, suppress
manipulation and insider trading. In accordance with
the Market Surveillance Regulations, TWSE discloses
daily information about abnormal securities trading
to alert investors, thereby protecting investors' rights.
TWSE may take disciplinary measures, as defined in the
Regulations, to constrain abnormal market behavior, and
prevent damage to the market.
warrants, orders are matched on a continuous basis
during an intraday regular trading session. At the opening
and closing of the trading session, warrant orders are
still matched by call auction. TWSE discloses the 5 best
bid and ask prices/volume of unexecuted orders after the
matching (including call auction or continuous trading
method) on a real-time basis.
In addition, investors can trade through an omnibus
trading account. After securities firms submit the post
allocation transaction statement to TWSE, the trades are
settled through the investor's own account.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
be borrowed to cover the shortfall, the buying securities
firm will get due bills issued by TWSE as temporary
coverage and the selling securities firm has to purchase
shares for the buying securities firm within the settlement
cycle.
Settlement of securities in the form of book-entry
is operated by the Taiwan Depository and Clearing
Corporation (TDCC, the CSD in Taiwan), entrusted by
TWSE; settlement of funds is through the Electronic
Interbank Funds Transfer and Settlement System (CIFS)
of the Central Bank, which acts as the settlement bank of
the securities market.
When a securities firm defaults, another securities
firm will be designated by TWSE to complete settlement
on behalf of the defaulted firm and to liquidate the
defaulted positions in the market. Losses and expenses
incurred will be initially first covered by the Joint
Settlement Clearing Fund (JSCF) contributed to by the
defaulted securities firm, then the First Special Clearing
Fund (SCF) contributed to by TWSE, followed by the
Second SCF and the JSCF contributed to by the other
securities firms, shared jointly pro rata.
Clearing and Settlement
According to the "Securities and Exchange Act", and
TWSE's "Operating Rules" and "Contract for Use of the
Centralized Securities Exchange Market", TWSE acts as
a clearinghouse for all the trades executed in the market.
All securities firms have to fulfill settlement obligations to
TWSE, which acts as the Central Counter Party "CCP"
and gives settlement guarantees to all the trades in the
market.
TWSE implements a same-day clearing method and
employs a multilateral net settlement to calculate the net
amounts of shares and funds receivables and payables
between securities firms and TWSE. The settlement cycle
is T+2.
Settlement obligations of securities firms have to be
fulfilled on settlement day; they are not permitted to be
deferred to the next business day. A securities shortfall
can be covered by applying to use TWSE's "Settlement
Coverage Securities Borrowing System" which requires a
collateral deposit and a borrowing fee from the borrowing
securities firm. If a sufficient amount of securities cannot
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
TWSE Securities Borrowing and Lending System
TWSE established a Securities Borrowing
and Lending System (SBL) on June 30, 2003.
Participants include institutional investors such
as securities firms, banks, insurance companies
and foreign institutional investors, while TWSE
serves as an intermediary. The system provides
three kinds of transactions: fixed-rate, competitive
auct ion and negot ia ted. Upon co l lec t ing
borrowers' collateral in fixed-rate and competitive
auction transactions, TWSE acts as the central
counterparty to assume risks. The introduction of
SBL mechanism in Taiwan not only increases the
liquidity of the Taiwan securities market, but also
attracts foreign investors to our market and makes
our market more competitive. More information
about SBL can be found at the TWSE website
(http://www.twse.com.tw/en/products/SBL/SBL_
edu.php).
Internationalization of Securities Market
In order to enhance international information
exchange and cooperation, TWSE has entered
into Memorandums of Understanding with more
than 30 foreign stock exchanges, and actively
participates in global securities meetings and
organizations, such as WFE, AOSEF, ANNA
and IOSCO.
To accelerate the l iberalization and
internationalization of the Taiwan securities
market, TWSE has vigorously engaged
the world in recent years. We have held
promotional tours to major global financial
centers and the Middle East. We wish to
connect the entrepreneurial spirit of Taiwan with
foreign investors' funds, and in turn enhance
the stock market's depth. In addition, TWSE
has held conferences and meetings, at which
famous foreign scholars and experts have
spoken to investment houses, individual and
foreign investors about current international
market trends as well as providing updates
on the continuing liberalization of our stock
market.
In order to keep up with the international
trend of developing index-related products,
TWSE, in association with FTSE, has launched
a series of tradable indices in Taiwan: the
"TWSE Taiwan 50 Index" on October 29, 2002,
"TWSE Taiwan Mid-cap 100 Index" and "TWSE
Taiwan Technology Index" on November
29, 2004, "TWSE Taiwan Eight Industries
Index" and "TWSE Taiwan Dividend+ Index"
on January 15, 2007. TWSE will continue
to cooperate with FTSE, in accordance with
international standards, to compile more
indices to be used for new financial products.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Monitoring of Securities Firms
According to the Securities and Exchange
Law, the establishment of a securities firm and
its branch has to be approved and licensed
in advance by the relevant authority. Prior to
participating in the market, a securities firm
must sign a contract with TWSE then deposit
a settlement and clearing fund. The securities
firm is responsible for its employees in both
sales representation and ethical behavior when
conducting centralized market business.
To enhance the financial structure and risk
management, all securities firms must meet the
regulatory capital adequacy ratio to maintain
regular business. TWSE regularly sends
inspectors to check the securities brokers and
dealers on-site to verify that their business
operations and financial status meet all these
requirements. In addition, TWSE maintains a
warning system that scrutinizes the operational
risk of securities firms, and also sets up a
risk control database for margin trading to
strengthen the risk management of securities
firms.
For the purpose of s impl i fy ing and
reducing paperwork of trading participants,
TWSE established a unified reporting system
in 1999 for securities brokers to file all TWSE-
required reports through a single electronic
user interface. TWSE also provides securities
brokers with e-mail trading and direct market
access (DMA) to make full use of the most
advanced technology. Furthermore, TWSE has
relaxed requirements for securities firms' sites
and facilities in addition to encouraging their
automation effort so as to reduce operational
cost.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
which became effective on January 1, 2003;
the "Securities and Futures Investors Protection
Center" was established. The Center manages
a protection fund to compensate investors
should securities or futures companies be
unable to do so due to financial difficulties.
According to Article 18 of the Act, TWSE and
other securities-related institutions are required
to contribute funds to the Center.
TWSE has implemented an "investor
personal data inquiry system". This system
helps to reduce the manual handling of
personal data processing. It also provides
speedy and convenient responses to personal
information inquiries, thus helping to lower the
possibility of fraud or forgery.
Investors Service
TWSE employs television, newspapers,
magazines, posters and other media for
promotional purposes, as well as holding
activities, workshops and seminars to inform
and educate investors in regards to investment
and finance. Investors are welcome to ask
questions by calling the Investor Service
Center (886-2) 8101-3101 or 2792-8188.
To enhance and protect investors' rights
and interests, TWSE and other securities-
related institutions jointly established the
"Securit ies Investors' Protection Fund".
Following the promulgation of the "Securities
Investors and Futures Traders Protection Act",
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Securities Information
To enhance the fairness and efficiency
of securities trading, as well as providing
a computer system for stock trading and
matching, TWSE uses various channels such
as websites and publications to give investors
easy access to securities information.
TWSE's website (http://www.twse.com.
tw) carries official announcements concerning
securities listing and trading, as well as
other securities information for investors'
consultation. In addition, the following 3
websi tes establ ished by TWSE can be
accessed from TWSE's home page.
1. Market Information System (http://mis.
twse.com.tw): This website provides real-
time trading information about the market
and individual stocks, including "Market
Summary, Sector Group Quotes, Five Best
Bids and Asks, Category Zone, Block Trade,
Odd Lot Trade, SBL Inquiry and Market
Announcements".
2. Market Observation Post System (http://
newmops.twse.com.tw): This websi te
provides financial and operational information
about listed companies, including company
profiles, financial statements, operational
summaries, electronic book and material
information.
3. Data e Shop (http://dataeshop.twse.com.
tw): This website provides data vendors
and investors with on-line subscriptions to
data services, including end-of-day market
statistics, index constituents and historical
trading data.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
To provide investors with versatile reference data,
TWSE publishes a "Stock Chart of Taiwan Stock
Exchange Capitalization Weighted Stock Index and
Trading Volume & Value" at the beginning of each year,
showing market trends since 1977 (in Chinese only). In
addition, TWSE also puts out the following periodicals,
which are also available on TWSE's website:
To inform and educate investors, TWSE has compiled
a series of booklets. Investors can either access the
booklets on TWSE's website (http://www.twse.com.tw/), or
obtain hard copies at securities firms' premises.
1. Taiwan Stock Exchange Review Monthly (monthly)
2. Taiwan Stock Exchange Statistical Data (annual)
3. Highlights of TWSE Listed Securities (annual)
4. Status of Securities Listed on Taiwan Stock Exchange (monthly)
5. Taiwan Stock Exchange Annual Report (annual)
6. Fact Book (annual)
TWSE has established an "Investors Reading
Room" (3F, No. 7, Sec. 5, Xinyi Rd., Taipei) to display
prospectuses and quarterly financial reports of all listed
companies, as well as monthly and semiannual financial
reports of all securities brokers and dealers.
To bring the public closer to the stock market, TWSE
set up an Information Center in mid-2008. The Center
provides the following information:
‧market data displays such as trading graphs, international stock market data, foreign exchange rates, trade data displays;
‧current trends in TWSE
‧ trading simulation systems and educational network services;
‧interactive inquiries and display systems;
‧live broadcasts of ceremonies and speeches.
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Introduction to the Taiwan Stock Exchange
Introduction to Taiwan Stock Exchange
Add: 3F、9-12F, No.7, Sec.5, Xinyi Rd., Taipei, Taiwan
11049, Republic of China
Tel: 886-2-8101-3101
The Investor Service Center: 886-2-2792-8188
Web address: http://www.twse.com.tw
E-mail: [email protected]
Published in October 2011
Taiwan Stock Exchange Corp.
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